Benzinga - by Shanthi Rexaline, Benzinga Editor.
Early indications suggest another day of lackluster trading after two months of subdued market activity. Index futures point to a modestly higher opening on Tuesday, while 10-year Treasury yields have surged to over 4.70%, adding to uncertainty about interest rates. The Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) data and an upcoming Federal Reserve speech could influence today’s trading.
Cues From Monday’s Trading
Monday’s trading saw mixed performance in the stock market. Rising bond yields continued to weigh on sentiment, despite the passage of a stop-gap bill by Congress. Economic data showed resilience in the economy but also rekindled rate hike fears.
The Nasdaq Composite had a mostly positive day, extending its four-session winning streak. The S&P 500 closed slightly in the green after a late uptick, while the Dow Industrials ended slightly lower.
Small-cap stocks, represented by the Russell 2,000 Index, were hit the hardest, closing down 1.58%. This index is down about 0.25% for the year-to-date period, reflecting the struggles of small-cap stocks amid economic uncertainty.
US Index Performance On Monday
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.67% | 13,307.77 |
| S&P 500 Index | +0.01% | 4,288.39 |
| Dow Industrials | -0.22% | 33,433.35 |
| Russell 2000 | -1.58% | 1,756.82 |
Analyst Color:
October kicks off a historically strong fourth quarter but this time the going could be tough, said analysts at LPL Financial. “Expecting this pattern to repeat this year is tricky given the overhang of a government shutdown, interest rates near 16-year highs, a market still trying to digest the Federal Reserve's ‘higher for longer’ message, and a consumer who is facing some stiff headwind,” said Adam Turnquist, chief technical strategist, Lawrence Gillum, chief fixed income strategist, and Jeffrey Buchbinder, chief equity strategist.
Based on seasonal trends, a rally may have to wait until the back half of October, the analysts said. “Whether that late-year rally comes will depend in large part on where interest rates go,” they added.
Corporate profit growth alone does not have the potential to drive stocks higher, given the economy is starting to lose some momentum and the dollar is so strong, LPL said. The government shutdown, though averted now, still carries the potential to disrupt investor confidence and put pressure on Treasuries next month, it added.
Futures Today
Futures Performance On Tuesday
| Futures | Performance (+/-) |
| Nasdaq 100 | +0.02% |
| S&P 500 | +0.12% |
| Dow | +0.06% |
| R2K | -0.13% |
In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) rose 0.14% to $427.90 and the Invesco QQQ ETF (NASDAQ:QQQ) edged up 0.09% to $361.60, according to Benzinga Pro data.
Upcoming Economic Data:
Atlanta Fed President Raphael Bostic is scheduled to speak at 8 a.m. EDT.
The Bureau of Labor Statistics is set to release the results of its Job Openings and Labor Turnover survey for August at 9 a.m. EDT. Job openings in August are estimated at 8.80 million compared to 8.827 million in July.
The Treasury will auction 52-week bills at 11:30 a.m. EDT.
Stocks In Focus:
- ALX Oncology Holdings Inc. (NASDAQ:ALXO) shares jumped over 21% in premarket trading after the company said it would report ahead of the market open interim Phase 2 ASPEN-06 clinical trial results of evorpacept for the treatment of advanced HER2-positive gastric cancer
- Nvidia Corp. (NASDAQ:NVDA) could be in focus after KeyBanc’s John Vinh raised the price target for the stock from $670 to $750.
- McCormick & Company, Inc. (NYSE:MKC) (before the market opens) and Cal-Maine Foods, Inc. (NASDAQ:CALM) (after the close) are among the companies due to report quarterly earnings Tuesday.
Crude oil futures edged up 0.09% to $88.90 in early European session on Tuesday following a 2.51% plunge on Monday.
The yield on the benchmark 10-year Treasury note rose 0.019 percentage points to 4.702%.
The major Asian market retreated, led lower by the Hong Kong, Japanese, and Australian markets, as the rising U.S. bond yields exerted downward pressure on stocks. The Chinese and South Korean markets were closed for public holidays.
The Reserve Bank of Australia left the key interest rate unchanged at 4.10% for a fourth straight meeting but hinted it may not be done with rate hikes yet.
European stocks traded modestly lower by late-morning trading on Tuesday.
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